Governor Pritzker rejects bankruptcy idea to get out of pension debt
CHICAGO - A suggestion by U.S. Senate Majority Leader Mitch McConnell that states like Illinois could file for bankruptcy to get out from under heavy public employee pension debt was rejected Wednesday by Gov. J.B. Pritzker.
McConnell, a Republican, floated the idea on Hugh Hewitt’s syndicated radio show. The Republican was discussing his reticence about additional aid to state and local governments to cope with reduced revenue because of the pandemic.
“We’re going to push the pause button here because I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” he said. ”There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.”
U.S. House Speaker Nancy Pelosi have said federal dollars for state and local governments should be part of a coronavirus relief package. The GOP led by McConnell beat back Democratic effort to have the aid in the latest package.
During his daily news conference Wednesday about the spread of coronavirus, Pritzker said while McConnell is important in the process of getting things done in Washington, many senators disagree with him. The governor said he is hopeful those senators realize state and local governments ``deserve and need additional support.”
Illinois has $138 billion in unfunded public employee pension debt. Under the the U.S. Constitution states are prevented from filing bankruptcy. Illinois’ constitution has a pension protection clause that treats pension benefits as a contract. The state’s Supreme Court has ruled the clause prevents public pension benefits from being diminished.
The issue of Illinois pension liabilities became an issue last week when state Senate President Don Harmon of Oak Park wrote a letter seeking more than $41 billion from the federal government. Pritzker did not endorse Harmon’s effort.